President Chain Store Corp (
Wang Wen-hsin (王文欣), public affairs manager at President Chain yesterday confirmed that the company is bidding on a 50-year BOT (build, operate, transfer) property development project with the Taipei City Government.
President -- the nation's largest convenience store operator with 3,290 7-Eleven stores -- has also signed a joint-venture with Japan's Takashimaya Co in Taipei's Hsinyi District to build a department store.
The BOT project, located on the corner of Chunghsiao and Keelung Road, will connect a shopping mall with office buildings via an MRT transportation hub, Wang said. The multiple-use complex project is expected to be completed in 2006 at a cost of NT$8 billion, she said.
"It's our belief that the Hsinyi District will become the city's future commercial focus," Wang said.
President Chain initially plans to invest NT$2 billion in the project, and later buy up to a 50 percent stake. Other major shareholders will include Uni-President Group (
With total paid-in-capital of NT$1 billion, the under construction President Takashimaya Department Store (
But investors said they are not convinced of President Chain's claim that the two projects will add substantial value to the company's bottom line. President Chain shares dropped NT$0.2 to NT$42.8 on the TAIEX yesterday, its lowest closing in history.
"The plans sound risky to me," said Nick Lai (
Lai said Taiwan's shopping mall business is already quite mature and possibly on the decline.
"Dutch cash-and-carry wholesaler Makro's recent announcement that it would withdraw from Taiwan due to financial stress was a signal that hypermarkets and shopping malls face serious competition in Taiwan," he said.
The yet-to-be-completed President Takashimaya will also be facing intense competition from rivals Pacific Sogo Department Store (
Another pundit said that President Chain is a little late arriving on the scene in the Hsinyi district.
"It already looks saturated for department stores and shopping malls run by competitors that have far greater experience and expertise," said Christopher Smith, an analyst at the Primasia Securities Co.
Smith also questioned the long-term viability of the BOT location.
"A sizable portion of traffic will be taken away from this BOT location once the new MRT line next to Taipei 101 opens up," he said.
But Phina Su (
"Actually they do have some experience ... the Uni-President Group is currently working on a NT$18 billion shopping mall project in Kaohsiung called the `Dream Mall' (統一夢公園)," Su said.
Su said President Chain's two new projects in the Hsinyi district have a good chance of surviving as they are expected to draw consumers from various locations around the city.
“When Warner Village started its business several years ago in Taipei,
nobody believed it would be so successful. But in the first two years alone
it attracted nearly 30 percent of the Taipei movie-going audience.”
Both Lai and Smith expressed negative sentiments about President Chain's new
investments, saying the company's lack of a catalyst in China and expansion
into non-core areas brings up growing concerns over its long-term growth
prospects.
The company's ambitions to grow in China were dealt somewhat of a blow by
7-Eleven Inc of the US, which gave the Taiwanese company only a 14-percent
stake in a joint-venture company to open 500 stores in Beijing by 2008,
company president Hsu Chung-jen (徐重仁) said in January.
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